Working Paper: CEPR ID: DP2459
Authors: Henrik Horn; James Levinsohn
Abstract: As international economic integration has progressed, policy makers have started to ponder the possible conflicts arising from nationally pursued competition policies in more unified goods markets. An idea underlying much of this discussion is the notion that international trade liberalisation, by limiting countries' abilities to promote their self-interest with beggar-thy-neighbour trade policies, will induce countries to instead use competition policies to pursue the same goals. We argue that one should not expect to find any particular relationship between trade policy and merger policy. Thus, we find no theoretical presumption that international trade liberalisation induces countries to pursue merger policies that have more of a beggar-thy-neighbour flavour.
Keywords: merger policy; strategic competition policy; trade liberalization
JEL Codes: F23; L13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| trade liberalization (F13) | merger policies (L49) |
| trade liberalization (F13) | competition in domestic markets (L13) |
| competition in domestic markets (L13) | need for competition policies (L49) |
| merger policies (L49) | international externalities (D62) |
| trade liberalization (F13) | lax merger policies (G34) |